Morgan fashion chain collapses with loss of 620 jobs

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Morgan, the UK high street fashion retailer, has collapsed after the company's French parent withdrew its distribution agreement. The closure will result in more than 620 job losses.

The closure takes immediate effect with administrators KPMG taking control of the company's assets.

Morgan specialised in women's clothing, appealing predominantly to teenage girls with a penchant for skin-hugging outfits. There were 19 stand-alone UK stores and 47 concessions within department stores such as Debenhams. The UK company also had 39 franchise stores. As a result of the closure, 284 full-time staff and 337 part-time staff have immediately been made redundant.

Morgan has struggled to compete against rivals such as Topshop and Primark in the highly competitive women's clothing market. After recording a hefty loss last year, Morgan's like-for-like sales fell more than 19 per cent in the first half to £11.8m, according to KPMG.

With losses stacking up, the UK division faced a funding crisis and could not raise the cash to pay wages or rent. After unsuccessful discussions with Bank of Scotland this week, Morgan's French parent withdrew its distribution agreement with Barry Prince, the owner of the UK and Irish licence, and the retailer was put into administration.

One reason that the retailer struggled to keep pace with the sector was that it had less pricing flexibility than its high street rivals. Morgan UK licensed most of its clothing from its French parent company.

The collapse scuppers the plans of the chief executive Simon Bentley who detailed plans in January to double the number of Morgan stores and concessions in the UK. The new openings accompanied store refurbishments and an upgrade of the company's IT systems, all part of a £3m makeover of the loss-making retailer.

KPMG said it had received expressions of interest for Morgan UK's real estate assets but without stock and a distribution agreement, the trading business had to be wound down.

In January, the rival retailer Kookai was placed in administration for similar reasons. Kookai was also dependent on its French parent for clothing supplies. Subsequently, the French company formed a joint venture with the former Marks & Spencer executive Maurice Helfgott to relaunch the UK business.

Internet sales and pirate products are hitting certain retail sectors. Last year, the music and DVD retailer MVC went into administration and its collapse was followed by the demise of the rival DVD retailer, Silverscreen. The wine retailer Unwins also entered administration last year, closing 350 stores with the loss of 1,800 jobs, although some stores were saved after the rival Threshers purchased a swath of outlets.